Archive for the ‘Economic crisis’ Category

A Lebanese man faces a death sentence in Saudi Arabia for sorcery: “According to his lawyer, Sibat, who is 48 and has five children, would predict the future on his show and give out advice to his audience.”(1) We here at MIM should also be charged with sorcery.

We are now in the second greatest economic crisis the United $tates has faced in the last 100 years. There is still time for this crisis to surpass the Great Depression depending on what happens next.

During the 2008 campaign, Obama brought out the tired old left-wing of parasitism idea that Amerikan “workers” only have false consciousness, divided over abortion and other such “wedge issues.” The left-wing of parasitism continues to believe that the majority of Amerikans are “exploited.” These phony leftists constantly predicted economic depression since World War II and they were wrong every time.

In contrast, MIM predicted one big crisis, this one. We hold that the Amerikans are not “exploited” in their majority and we even said that an economic crisis would have to be severe and long for re-proletarianization to occur. The first reaction to economic crisis would be an accelerated move to recapture old privileges.

We were correct.

Here is what we said about Nazi Germany:

“Nonetheless, despite the devastation of the war and the dire economic conditions, ‘re-proletarianization’ was little in evidence. The German population continued to complain about reparations, land claims and much more. The subjective will to build a socialist Germany did not exist in a widespread way prior to the Red Army’s seizing power in Germany and even well after. The Soviet occupation accomplished land reform and reparations that undercut the Nazis. Since the popular will for socialist construction did not exist with its own German ‘umph’ it was crucial that the Red Army imposed land reform, a successful referendum for expropriation and reparations to the Soviet Union that laid the eventual basis for the German people’s not looking down on others. In the future, to improve on such a result even more, MIM is going to favor opening the borders to immigrants instead of gradually sending more and more ‘foreigners’ home, as happened with Soviet troops trickling back to the USSR during the occupation of Germany. Where possible, immigrant workers and tourist members of the national bourgeoisie of the Third World may serve as a basis for going further in transformation than eastern Germany did.(2)

Germany faced a much greater devasation than the United $tates of today does, but it did not re-proletarianize. Likewise, neither is the United $tates “polarizing” politically through a re-proletarianization during the current economic crisis. That is the left-wing of parasitism’s delusion.

The Tea Party movement senses that the economy used to run without such a federal deficit and now seeks to reclaim that state of the economy. It is far from what the left-wing of parasitism had in mind in an economic crisis, but it is exactly what we said would happen without something even more devasting than what Germany faced.

It is important that the international united front not be fooled by prattle in the United $tates. There is a long and difficult task ahead. Substantial change can only be imposed from outside. The best that can be done is to contain Amerikan decadence and perhaps reform the anarchy of production somewhat. The central class question cannot be resolved until the joint dictatorship of the proletariat of the oppressed nations arrives.

By Aesopian quoting of snippets from the late 1990s, a number of Democratic and Republican pundits in the media have shown that they have seen my POLITICAL efforts against fascism and racism just prior to 9/11. I have stressed how lynching contributed to the Afghan and Iraq wars.

Yet, secret services and cross-racial rape accusations have been factors in wars since before capitalism started. The economic world led by Alan Greenspan at the time of 9/11 was more unique to capitalism and may prove to generate greater historical interest than 9/11 itself.

The left-wing of parasitism in the West was constantly advocating that activists bash their heads on a wall of concrete a mile thick, the labor aristocracy. Bush carried only the white vote in 2004 and McCain took the white high school grad vote by 58% in 2008, and still these pseudo-leftists did not get a clue. All these decades, the pseudo-left attacked capitalism at its strong point, the labor aristocracy and missed the weak spot, because the weak spot involved a blow to our egos here in the imperialist countries.

MIM’s repeated analyses showed that there was no exploitation of the white working class; hence, it was a petty-bourgeoisie. The ones sounding most similar to us concluded that was reason to lynch MIM and obtain support for a liberal Democratic minority that way.

Finally in 2008, the class struggle broke through against capitalism’s true weak spot, precisely identified by MIM and no thanks to the left-wing of parasitism. International exploitation reached a point where our Ponzi economy came tumbling down.

For this, Alan Greenspan has received the blame of allowing a housing bubble and a dollar that was too high. He correctly replied that within the rules of capitalism as they existed, the savings of the Third World came online and made low interest days inevitable. He was only wrong in crediting that factor while giving the technological boom of the Internet too much credit. The Internet was not the reason for the Clinton budget surplus or prosperity.

Greenspan could use his power at the Fed, but as he pointed out in The Age of Turbulence he would not be able to move the interest rate market around as much as people on the outside thought and even if he did, there was no guarantee that the critics would have been right about the consequences.

The innovation of Greenspan was to leave behind severe cycles of money tightening. He enjoyed good periods of apparently long economic growth in the United $tates. Greenspan seemed unlike most economists and prior central bankers to that degree.

Greenspan correctly understood the monetization struggle without calling it that. His policies seized for the United $tates and the West generally the most surplus-value from the Third World possible. This became apparent to finance ministers after the fact when they looked at how home equity loans could be used to purchase imports from the Third World. The asset bubble was not just a speculative bubble: it brought real goods into the United $tates.

It was only thanks to the ineptitude of the left-wing of parasitism and all the blocks thrown in the way of a MIM-type analysis that Greenspan succeeded too spectacularly. The United $tates gave the Third World (China, Mexico etc.) Wall Street traded stock in companies selling Third World produced goods. Simultaneously, Greenspan set about to make such assets worthless without knowing it.

The greater the monetization of U.$. housing and stock assets, the more Third World goods the United $tates could get for them. Along these lines, both federal and private sector deficits played their role.

In the wreckage we have now, the true defenders of the Democratic Party are Paul Krugman, Robert Reich and other Keynesians. MIM’s concerns must still as yet appear peripheral, because we have not developed the intellectual school of thought to replace the old ones. Peripheral is still a step up from invisible.

To keep us calm, and massage our “animal spirits,” Krugman and others tell us that Obama is a Republican-lite, who should be doing even more deficit spending to avoid a Japan-style “lost decade.” Yet the fact is that February federal spending set a record deficit of $221 billion,(1) a large number by any standard. MIM is told that Obama thinks just like us; yet, he set the record deficit. Meanwhile, we hear that Iran opposes all Marxism, but it recognizes dollar robbery when it sees it.

Clinton Labor Secretary Reich tells us that new jobs when they arrive will be at lower wages. The Keynesians are hoping China and others will step up consumption to stimulate global aggregate demand. It’s hard to see the “labor market clearing” any other way at the moment. Where we might intersect with some Keynesians sometimes is where we see new demand coming from. Ironically, labor unions concerned with U.$. workers on the bottom might also support us for our anti-dollar stand, if they ever put aside their mafia special interest thinking long enough.

MIM’s approach is different from the old thinking of unions and Keynesians. We wonder whether non-finance dominated economies of the world can arrange a new capitalist synthesis. I suspect that they can, even as the imperialist countries we call finance-dominated are out of gas. The question is whether the investor class can manage the financial struggles. Lately, the investors do seem able.

If the BRICS and other non-rich country economies cannot arrange a new synthesis for capitalism, two political factors might be internalized racism and intra-proletarian ethnic strife. Internalized racism will involve an attempt at going back to doing business with the United $tates as before the financial crisis. It will amount to Asian investors in particular coming to believe that they cannot do better elsewhere; hence, they will go back to loaning Amerikkka money to occupy Asian countries.

The top three foreign investors in U.S. treasuries abroad are China, Japan and the oil producers (Russia counted separately.) Hong Kong by itself sometimes holds more U.S. Treasuries than Britain, currently in fourth place.(2)

Intra-proletarian ethnic strife is another obstacle to the relaxed economic integration needed for a new capitalist synthesis apart from the West. Sum total it boils down to whether some aspects of business-related racism are higher in the rest of the world or in dealing with the United $tates. If the rest of the world is more internationalist than the United $tates, there will be a political basis for going beyond capitalism as it exists, within capitalism.

Whether the non-Western capitalist countries can integrate more closely is important to establishing socialism, not directly, but in understanding geopolitics and class struggle as they really exist. If the investment class cannot work business relations outside the United $tates in a less racist way, then the way is cleared to intensified contradictions of either socialism or barbarism, barbarism being an extension of the world the United $tates has already created where pornography consumption and war consumption continue to increase as distinctive features of the economy.

For us at MIM, it is unlikely that U.$. wages will reduce to the level where “labor markets clear,” if political anti-Amerikanism and a new capitalist synthesis are on the ascendant. The U.$. economy can only change directions 10 and 20 years from now, and that provided only there is a determined change in political direction now. Parasitism sometimes guised as political correctness is too deeply culturally entrenched in unproductive aspects.

Nonetheless, anti-Amerikanism and a new global capitalist division of labor provide the longest term chances of lengthening the survival of capitalism. This current movement is conditioned by the international proletariat but led by the national bourgeoisie of the oppressed nations.

Should that national bourgeoisie fail we hope to see that national bourgeoisie fail in such a way as to awaken the exploited. When the investor class returns to Ponzi schemes and U.$.-style militarism, the international proletariat must launch a variety of cultural movements bringing the emphasis back to the Third World. The reason this may in fact happen is that the national bourgeoisie must picture the U.$. labor aristocracy on the one hand and the exploited of their own countries on the other hand.

The small-minded small exploiters of the West have no end of fantasies of turning other countries into parking lots. Those petty exploiters will take a salary for teaching oppression in schools or videotaping their own sex acts if we let them.

The internalized racism of the international proletariat only goes so deep. Infatuations with Amerika can only be temporary as real conflicts of interest sharpen. Even as the national bourgeoisie protects its own rule, it should educate the exploited to its group interests against the petty Amerikan exploiters. Such a struggle occurs naturally as a cultural rejection of the lifestyle of the Western petty-bourgeoisie. Injecting the economic element into this cultural struggle guarantees its success.

In the end it is a question of erring to the side of the Western labor aristocracy or the side of the Third World exploited. When the investor class and national bourgeoisie decides this question, it decides its class alliances. If the national bourgeoisie fails in resisting Amerika, it should hope to fall to socialist revolution, not slavish subservience to Western culture.

The banks and GM have been trying to emerge from federal control. This has occurred through easy money-making policies established by the Fed for the banks.

On the plus side, there is the appearance that the merger of state and banks decreases somewhat — a move away from corporatism underlying fascism. When Uncle $cam took over the banks, it was not on behalf of worker democracy, worker justice or some worker uprising. It was along the lines of what we saw in Hitler Germany.

Citigroup and Bank of America have announced moving away from the government’s control this past week.

For now, the bankers have managed to disguise their uselessness. However, what they have really done is move the problem somewhere else.

I have some suspicions about the motivations for stories on a strengthening Renminbi at this time. The “Financial Times” just published, “China hints at stronger renminbi.”

Regardless of the motivations for this at this time, one should ask some questions.
1) Is this a slippery slope of expectations?
2) Is there really a political solution for where things end up going once expectations get going?

I believe the EU and Japan are in position to ask for some favors, but it’s not clear to me that a stronger Chinese currency against the greenback has really been thought through.

At Harvard University, yesterday, and in previous talks, Dwight Perkins has hammered home the idea that China does not consume enough. His idea seems to dovetail with rebalancing the China-U.$. relationship to boost Chinese consumption and thus, presumably, U.$. exports.

Martin Feldstein has also taken aim at the China-U.$. current account.(2) This is to get at the idea of whether or not the U.$. economy’s Ponzi-like character can be addressed without talking about China.

In other news, Dwight Perkins and a colleague reported yesterday that they see no evidence for negative developments in economic inequality in this downturn. Latin America has gone through with re-distribution policies and China seems to have started a massive redistribution of investment to the countryside, since before the downturn.

On October 15, the European Union and S. Korea concluded a record trade deal.

Iran also recently spoke favorably of Korean unity in the context of Korean-Iranian trade.

The Democrats in Congress sidelined a free trade agreement with Korea in the Bush administration. The Amerikan Democrats answer to the labor aristocracy on trade questions more than Bush did and they are thus additionally contributing to the global economic downturn.

A new currency to challenge the dollar in local interests has appeared in discussion–the sucre.

“The nine members of ALBA, conceived by Venezuelan President Hugo Chavez, are Cuba, Dominica, Venezuela, Ecuador, Nicaragua, Honduras, Saint Vincent and Antigua, Bolivia and Barbuda.” ALBA is behind the move for the sucre.

We wish the ALBA speedy success. Notwithstanding our criticisms of Castro, Castro always had put forward a united front worthy line on debt relief as well.

MIM is encouraged to see Sarkozy, Joseph Stiglitz and Amartya Sen dump on the overuse of GDP figures. It’s a kind of fetishism MIM has attacked for 25 years.

The dirty secret is that GDP is just whatever people spend money on and as such it has appealing philosophical properties for some, but not us. For us it really does matter if money ends up just spent on anti-migrant fences, tanks, employing people to manufacture banking fees and other forms of paper-shuffling.

Because of the economic crisis, GDP fetishism twists the healthcare discussion at this particular moment much more than usual.

Xinhua reports a bribery and corporate spying case that has cost Chinese over $100 billion or $70 per citizen in six years. Stern Hu, Liu Caikui, Ge Minqiang and Wang Yong of Rio Tinto face criminal charges. Rio Tinto is British-Australian owned and conducts mining of iron ore in Australia for China.

Fees for iron mining increased from $3 billion to $50 billion a year in five years.(1)

The case no doubt causes tension with Australia. However, Australia just signed a $40 billion natural gas deal with China.(2)

We have read several reports on this matter. We now speculate that Obama released the Uighurs at Gitmo to Bermuda in order to punish China for starting to raise this scandal of overpayment to the Australian labor aristocracy. The British made a pointed claim of not being involved, but then a Uighur leader in Amerika, Rebiya Kadeer suddenly appeared in Australia to make a speech.(3) In turn China, downgraded its political contact with Australia.

Another interpretation would be that hard-liners within China coordinated with the Uighur rebellion to crackdown on foreign trade run amok. MIM has no idea, so we do not commit our readers in any direction.

Regardless of the shrouded political and diplomatic truths, the case teaches people what to watch out for — corruption. Many are unable to grasp exploitation in the abstract, but they can understand that perhaps business goes awry with bribery and spies. We praise China for making self-criticism.(4)

The BBC published a useful article on China’s dollar holdings. China actually cut its U.$. debt holdings 3% in June, a record in recent years. In 2008, it was China that rescued the United $tates, by increasing holdings of U.$. debt by 52%.

Japan and England have picked up slack for the United $tates this year, while China’s holdings of U.$. debt have grown only 7% so far this year total.(1)

Amerikan debt-holders should continue to push the United $tates in a diplomacy-first direction. There is still much potential in cutting military and wasteful homeland security spending. There are many in key places who agree.

Amerikkkan media bloviators are used to pummeling Iran, Korea and Arabs generally. They must learn to get past their old conflicts to cut back on their parasitism.

Bloomberg reports that “Russian President Dmitry Medvedev last month illustrated his call for a supranational currency by producing a sample coin after a summit of the Group of Eight nations.”(2) President Medvedev also said today that he is working on Mideast peace with I$raeli president Peres.(3)

On a technical note for the dollar, Japan, Germany and France returned to economic growth in the second quarter of 2009.(4) Although the U.S. Federal Reserve put out feelers for increasing the interest rate soon, it appears that other countries will be able to raise interest rates sooner than the United $tates if the surprise growth of France and Germany turns out to be true. Higher relative interest rates boost currency values.

The case for a new currency remains strong. When China, India and the oil producers agree, there can be a new reality.